A practical guide to understanding your legal options for debt relief in South Africa.
With over 900 jobs lost in Uitenhage in 2025, many Eastern Cape residents are reassessing debt relief options. This article explores whether sequestration is the smarter alternative to debt review under current economic conditions.
📉 Economic Pressure in the Eastern Cape
In June 2025, Goodyear South Africa announced the closure of its Kariega (Uitenhage) tyre manufacturing plant, ending 78 years of operation and resulting in the loss of approximately 907 jobs. This event has intensified financial strain in the region, where unemployment already exceeds 41%.
For many affected individuals, traditional debt repayment is no longer viable. Legal debt relief mechanisms such as debt review and sequestration are increasingly being considered.
⚖️ Debt Review: A Structured Repayment Plan
Debt review is regulated by the National Credit Act 34 of 2005 and is designed for consumers who are over-indebted but still earning an income. It involves:
- Assessment by a registered debt counsellor
- Negotiation with creditors for reduced payments
- Court confirmation of a repayment plan
- Retention of assets if payments are maintained
Debt review provides legal protection but does not reduce the total debt owed, and repayment can take several years.
📘 Learn more from the National Credit Regulator.
🧠 Sequestration: The Smarter Alternative?
Sequestration is governed by the Insolvency Act 24 of 1936 and allows an individual to apply to be declared insolvent. If approved:
- A trustee liquidates assets and pays creditors
- Most remaining debt is written off
- Legal protection begins once notice is published
- Rehabilitation is possible after four years or earlier
For those with no realistic ability to repay debt, sequestration may offer a more decisive and structured exit.
📘 See the South African Government’s guide to insolvency for more details.
🔍 Comparing Debt Review and Sequestration
Two Major Differences between Debt Review and Insolvency:
- Debt Review:
You pay the debt until it’s settled, even if it takes you more than 5 years.
Sequestration:
Up to 90% of the debt is written off, and the remainder is paid interest-free and with no additional administrative fees or legal fees.
- Debt Review:
You will only be able to receive your clearance certificate and clear your credit profile upon settlement of the debt.
Sequestration:
You will be able to apply for rehabilitation from as soon as six months after date of sequestration. (Terms & Conditions Apply).
📍 Relevance for Eastern Cape Residents
In towns like Kariega, Gqeberha, and East London, the economic impact of factory closures and retrenchments is significant. For those who have lost income or face legal action from creditors, sequestration may be the smarter alternative to prolonged repayment plans.
📚 Legal Considerations
To qualify for sequestration, applicants must show:
- Factual insolvency (liabilities exceed assets)
- That creditors will receive at least 10 – 25 cents per rand owed
(Dependent on the province). - That the process benefits creditors more than continued debt management.
Legal advice is recommended to navigate the court application and trustee appointment.
🧾 Conclusion
While debt review may suit individuals with stable income and manageable debt, sequestration is often the smarter alternative for those facing severe financial distress. Understanding the legal and financial implications of each option is essential before making a decision.
📞 For more information about the sequestration process or to explore whether it may be appropriate in your circumstances, you can contact Insolvency Care or reach out via WhatsApp at 073 071 3809 for a confidential discussion with a registered consultant.
Disclaimer: The article is for informative purposes only. It does not serve as legal advice, nor is it intended as such. Please speak to our attorneys before relying solely on the information herein to make any decisions.